Russia and OPEC have divergent views on a “fair price” for oil, but the two sides will continue to cooperate on managing the market, Russian President Vladimir Putin said Thursday. Russia is comfortable with an oil price in the range of $60-$65/b, given that the Russian budget is built on a $40/b price assumption, Putin said, according to a report by Russia’s Prime news agency.
At the same time, OPEC’s largest producer and de facto leader, Saudi Arabia, which has a less diversified economy, is seeking higher oil prices as its budget is based on higher oil price levels, Putin said. That makes Saudi Arabia more eager to extend the OPEC/non-OPEC coalition’s production cuts beyond their expiry at the end of the month, but Putin declined to say whether Russia would agree. “We have certain disagreements, linked to a different understanding of the fair price,” he said in St Petersburg.
“We have to take into account all the factors: output drop in Iran [and] Venezuela, problems in Libya, Nigeria,…and an increase in consumption in the summer season. I won’t tell you now what considerations we have over what we need to do in the second half of the year, but we will be taking a consolidated decision together with our colleagues in OPEC.”
OPEC and 10 non-OPEC allies led by Russia agreed in December to cut a combined 1.2 million b/d in supplies through June. Saudi energy minister Khalid al-Falih is due to meet with Russian counterpart Alexander Novak at the St. Petersburg International Economic Forum this week, as well as in Moscow next week.
Venezuelan oil minister Manuel Quevedo, OPEC’s president for this year, is also at the forum. Among his tasks are brokering an agreement for the date of the next OPEC/non-OPEC meeting in Vienna. Originally scheduled for June 25-26, Russia has requested a date change to July 3-4, but several members, notably Iran, Algeria and Kazakhstan, have said they are opposed to moving the meeting.
Putin said Russia has no plans for OPEC membership, “but we have a certain mechanism of cooperation and the decisions will be consolidated”.